Checking vs. savings
A checking account is built for everyday money moves: getting your paycheck by direct deposit, paying bills and buying things. It usually comes with a debit card and often pays little or no interest. A savings account is for money you plan to keep for a while and usually pays interest. Many people have one of each.
How a debit card works
A debit card spends money straight from your checking account. Unlike a credit card, you’re not borrowing. If the money isn’t there, the purchase may be declined or cause an overdraft.
If you’re under 18
Many banks and credit unions ask a parent or guardian to open the account with you.
Deposit insurance
Deposits at FDIC-insured banks and NCUA-insured credit unions are protected up to $250,000 per depositor, per institution, per ownership category.
APY: comparing savings accounts
APY shows what savings earn in a year, including compounding, so it’s the fairest way to compare accounts. APR, by contrast, is the yearly cost of borrowing. Rates change over time.
Common fees and how to avoid them
Common fees include overdraft fees, monthly maintenance fees and out-of-network ATM fees. Many monthly fees are waived if you meet a rule, like direct deposit or a minimum balance. For one-time debit card purchases and ATM withdrawals, banks must get you to opt in before charging overdraft fees; if you don’t, those purchases are usually just declined.